• LOSS: Mexico’s state-owned oil company (Pemex) reported a 92% increase in its yearly losses in 2019 reaching the equivalent to USD 18.3 billion despite major investments by the López Obrador Administration of approximately USD 5 billion.
• EXPLANATIONS: Among the variables behind the loss, according to the company is the low price of Mexico’s crude oil mix, a smaller volume of sales, and lower prices for gasoline and diesel. However, experts have raised important questions about Pemex exploration efforts and refining strategy.
• DOWNGRADE: “Talking this week with the rating agencies, they were already preparing for a downgrade, and in this sense, the news does not help at all,” said Duncan Wood, director of the Mexico Institute at the Woodrow Wilson Center.
• JUNK: Last June, financial assessment agency Fitch Ratings downgraded Pemex debt to junk territory (BB+). If another major rating agency decides to follow suit, this would present a heightened risk to Mexico’s national debt, given that the government has acted as an implicit voucher for Pemex.
